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Can someone shed some light on how servers are paid/their finances?

29,999 3,897 November 19, 2019 at 12:36 PM
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In a group on local (town) discussions the topic of tipping came up and some people have posted what's effectively a meme, I am trying to dig into the math. I don't want to turn this into a discussion on tipping but I'd like to know how the average server is paid. From what I understand, (in most states at least), servers have a min wag lower than the rest of the working population, an acknowledgement that they should make that difference up in tips.

From there is where I am confused - There is a "tip out" in many restaurants where the servers either pool tips, or at least give a portion (typically 20% is what I've read) to cover staff that fall under the lower minimum wage but don't necessarily have a lot of contact with customers (e.g. bus staff). Some restaurants do this on the value of tips reported, others do it based on a flat % of sales.

Then my reasoning/math falls apart. I'll post the meme when I get a chance, but the argument is that if you don't tip, they (the server) is basically paying for the opportunity to serve you. Their math is poor and I just can't see how that could happen, which is why I'm trying to understand it better.

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#2


this meme?
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Quote from rufflesinc
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this meme?
No access @ work which is why I didn't post the original to begin with
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Quote from rufflesinc
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this meme?
Now that I'm at home it's this one

So it implies that the implied tip is "split", 3% to bartender, 4% to host (in this situation it appears the restaurant policy is to assume that the waiter is getting some % of a check as a tip).

The part about "IRS assumes" is BS in what I can find... apparently this USED to be the case many years ago, and it wasn't 15% but 8%, but is no longer the case. Or, that the % figure is an average for an entire restaurant, and would be a restaurant issue in case they were audited [intuit.com]. Regardless, it's not 15%. For this case let's assume all tips are recorded accurately.

I don't get the math here.... what I am looking for is some sort of accounting version like:
Hourly pay x hours worked = $X
Tip income
(tip splitting)
etc etc etc

I guess seeing an actual itemized pay stub would help too

I believe as well that although servers have a lower "minimum wage", if the difference between that and the real min wage (for the rest of us) is not met with tips, the restaurant must make that up?
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the attached calculation is pretty straightforward, no? Tip out of $7 based on $100 total, not based on how much customer actually tipped. So if tip is $0, then $7 comes out of servers own pocket.
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There's nothing really terribly wrong with the math. I'm not sure what you're confused by. Even if you ignore the 15% in taxes, with a tip-out policy like that she's still paying out for every table she has regardless of tips. Restaurants must make up the difference between the server wage and minimum wage but on a per-table basis, the meme is correct.

Let's say a server has 10 tables that tip 20% on $100, so $200. She tips out $10.45 on each table and ends up $95.50. Now another table comes in and tips her nothing on a $100 bill. Her total tips for the day would now be $95.50-$10.45=$85.05. She has essentially lost money waiting on that table.
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Out of curiosity, why would you even what to spend the time on this? Basic rule as I understand it is you should tip 20%. Less if the service is crummy. More if they give superior service\effort (which is pretty rare in my experience). How they all deal with splitting that is really moot to everyone but them. They will sort it all out. If you tip less because of lousy service and they end up having to pay off bus boys or kitchen people, it is their own fault and not your concern really imo.

As to what happens if they end up short of min wage, I would imagine the market makes up for that in the end anyway as if the restaurant is so bad it does not have many customers, customers are routinely tipping nothing or under 20% for lousy service\food and\or the owner is stealing the tips, then that restaurant will not be in business for long. If employees make less than min, they are going to go elsewhere. Not sure what the IRS does, but you can be sure that if the place is audited they will assume something beneficial to the gov all round.

My 2 cents.
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Quote from YanksIn2009
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Out of curiosity, why would you even what to spend the time on this? Basic rule as I understand it is you should tip 20%. Less if the service is crummy. More if they give superior service\effort (which is pretty rare in my experience). How they all deal with splitting that is really moot to everyone but them. They will sort it all out. If you tip less because of lousy service and they end up having to pay off bus boys or kitchen people, it is their own fault and not your concern really imo.

As to what happens if they end up short of min wage, I would imagine the market makes up for that in the end anyway as if the restaurant is so bad it does not have many customers, customers are routinely tipping nothing or under 20% for lousy service\food and\or the owner is stealing the tips, then that restaurant will not be in business for long. If employees make less than min, they are going to go elsewhere. Not sure what the IRS does, but you can be sure that if the place is audited they will assume something beneficial to the gov all round.

My 2 cents.
It sounds like there are some cheap assholes trying to justify their shitty tipping. I've heard people here try to justify not tipping by saying hey could only afford the food but not the additional tip like somehow that justifies their actions.
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As to why I care? When someone posts that by not tipping they are basically paying to serve, that piques my interest as a math-oriented mind.

It seems that the meme's basis on tipout is the fundamental assumption that the restaurant is tip-out based on sales not actual tips reported. Seems like a farked up place to work when they assume what you make. It could be that cash tips are underreported, which seems obvious.
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Quote from Dr. J
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As to why I care? When someone posts that by not tipping they are basically paying to serve, that piques my interest as a math-oriented mind.

It seems that the meme's basis on tipout is the fundamental assumption that the restaurant is tip-out based on sales not actual tips reported. Seems like a farked up place to work when they assume what you make. It could be that cash tips are underreported, which seems obvious.

Of course cash tips are under-reported. As are cash sales in restaurants. It has been going on forever. The IRS got so obnoxious that they count pizza box purchases to estimate sales on pizzerias they audited (you can hide a cash sale or the ingredients used to make a pizza, but it is hard to hide the purchase of the boxes). If the sales+pizza boxes in stock don't match the order total, they figure the owner has hidden sales and up his income and penalties.

As to sales vs. actual tips, that is kind of messed up. Not only assumes what you make, but assumes people tip 20% all the time (which is probably true for the overwhelming majority of the time in decent places, but not necessarily in crummy places). Might be just laziness of the owner or might be the owner does not want to keep track of the tips individually for fear that his employees will skim off tips\not report them so they take the easy way out and just assume 20% on each sale and if a server gets a smaller tip for whatever reason they are sol. Again, I would think in higher end places none of this is a problem for the most part. The local dive would be another story obviously.
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Quote from NYExcuse
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It sounds like there are some cheap assholes trying to justify their shitty tipping. I've heard people here try to justify not tipping by saying hey could only afford the food but not the additional tip like somehow that justifies their actions.
Sort of a ridiculous argument on their part imo as everyone knows you have to add 20% to whatever the bill ends up being. I know some people who do not count the tax as part of the amount to give 20% on and I am fine with that if one wants to go through the time to do the math as people do not need to get rewarded for the sales tax just the actual amount of the food purchased.

Plus common sense will tell you that if you plan to eat at a place regularly, you really do not want to come across as a cheapskate as after all, these people are handling your food lol.
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Quote from YanksIn2009
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Of course cash tips are under-reported. As are cash sales in restaurants. It has been going on forever. The IRS got so obnoxious that they count pizza box purchases to estimate sales on pizzerias they audited (you can hide a cash sale or the ingredients used to make a pizza, but it is hard to hide the purchase of the boxes). If the sales+pizza boxes in stock don't match the order total, they figure the owner has hidden sales and up his income and penalties.

As to sales vs. actual tips, that is kind of messed up. Not only assumes what you make, but assumes people tip 20% all the time (which is probably true for the overwhelming majority of the time in decent places, but not necessarily in crummy places). Might be just laziness of the owner or might be the owner does not want to keep track of the tips individually for fear that his employees will skim off tips\not report them so they take the easy way out and just assume 20% on each sale and if a server gets a smaller tip for whatever reason they are sol. Again, I would think in higher end places none of this is a problem for the most part. The local dive would be another story obviously.
I guess my point is this.... in the image I posted, the server should blame the restaurant (or other servers for traditionally underreporting tip income) rather than the patron - if not for the restaurant having archaic rules on tip-out, the patron that doesn't pay a tip wouldn't otherwise affect their tip $$.
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Quote from Dr. J
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I guess my point is this.... in the image I posted, the server should blame the restaurant (or other servers for traditionally underreporting tip income) rather than the patron - if not for the restaurant having archaic rules on tip-out, the patron that doesn't pay a tip wouldn't otherwise affect their tip $$.

This is true, but in today's never take responsibility for your own actions, safe-place, participation trophy, entitled social media environment, does it really surprise you they are trying to blame someone else for either their own or their establishment's shortcomings or want the patron to pay even with bad service (which is what that thing is basically trying to guilt a patron into imo)? If an establishment is so bad that patrons regularly refuse to tip or undertip, then they get what they deserve and the market will correct it shortly lol.

Most people if they go to a place with service so bad that they refuse to tip or under tip, they are never going to go back there again and will probably tell friends and maybe post a bad review on yelp just for good measure. A restauarant can't do that for long and expect to survive.
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Quote from Dr. J
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I guess my point is this.... in the image I posted, the server should blame the restaurant (or other servers for traditionally underreporting tip income) rather than the patron - if not for the restaurant having archaic rules on tip-out, the patron that doesn't pay a tip wouldn't otherwise affect their tip $$.
The server has every right to be pissed at someone who doesn't tip regardless if they have to tip out. You're expected to tip in this culture and people know that going into a restaurant. Anyone who regularly doesn't tip is a garbage human being.
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